'We generate sufficient profits to grow the Indian business'
He has worked in more than half-a-dozen countries in a career spanning 25 years, but in the last six months, this six-footer CEO with the shaven head — a la Vin Diesel or Ben Kingsley, take your pick — has been relishing something he missed all these years — chicken tikka, gosht (lamb) and nan.
“I love it,” says the 47-year-old Mark Robinson, who began his banking career in neighbouring Pakistan way back in 1984. Heading one of the largest foreign banks in India, the Englishman, who also overseas other South Asian countries (Sri Lanka and Bangladesh), has a tough job at hand given the problems at the New York headquarters. Robinson took out time last fortnight to share with BT’s Anand Adhikari his assessment of Citi’s India franchise. Excerpts:
Globally, Citi is still having it rough. The latest we hear is about the exclusion of Citi from the Dow Jones Index. Is the worst over?
Citi will be among the most well-capitalised large banks in the world after the pending conversion of preferred equity to common stock. We are focussed on getting fit and our aim is to return to consistent profitability and generate shareholder value as soon as possible.
Will raising resources from the parent be an issue for Citi India?
We are pretty much self-sufficient on the capital issue. In fact, we have never repatriated profits in the last seven years. We generate sufficient profits to grow the Indian business....
I can assure you that we will show a profit for 2008 (the annual results will be declared at the end of June).
What’s the sense you are getting on the economic recovery here?
It’s good that the equity markets have rebounded, but I’m a little cautious in linking the resurgence of Indian equity markets to a global recovery. There is certainly some amount of euphoria in the markets after India’s election results. Our economist has already raised the GDP forecast to 6.8 per cent for the current year from 5.5 per cent, in part due to the likelihood of increased investments resulting from confidence in the likely economic policies as well as increasing access to domestic and international capital.
...and at the global level?
I think it’s too early to talk about a full-fledged recovery in the US; for example, you still have two key indicators— unemployment and housing prices—that have yet to show any significant improvement.
How is Citi’s business responding in India?
Our business is growing. We have recently launched two new products in the market—Online Remit for faster remittances into India and mobile banking.
How do you plan to take the business forward?
We will continue to grow our balance sheet in India. We will take a balanced approach to managing consumer credit in India. This means being prudent with our unsecured consumer asset portfolio, whilst the credit infrastructure—like credit bureaus—is still maturing. Also, we believe there is an important role for all banks to play in helping educate consumers in using credit wisely. We are also very keen to do more business with our consumer clients. Today, we know for sure how many products we are selling to big corporate clients, but the same is not true for a consumer client. We want to use the existing relationship to do more business.
We have seen widespread instances of stressed SMEs (small & medium enterprises)…
Our SME portfolio is quite small. In fact, we haven’t seen a major deterioration in our portfolio except in the case of a few exporters. Unlike other banks, we define SME as a company with revenues of over $50 million (Rs 240 crore). Today, we have over 40,000 smaller companies that we serve in our commercial bank and we expect their share in Citi’s overall business to grow significantly in the next five years.
Are you also helping corporates that are under some kind of a stress?
Yes, we are working with our corporate clients in these challenging times. In late May, we were the joint arrangers in refinancing the remaining portion of a $3 billion (Rs 14,400 crore) loan for Tata Motors in their acquisition of Jaguar-Land Rover. The international tranche was closed after Citi helped Tata Motors raise Rs 4,000 crore through a rupee bond issue. Citi was the only bank mandated on both of these financing deals.
What’s the progress on repositioning of the troubled CitiFinancial, the non-banking finance arm?
CitiFinancial is now part of Citi Holdings. We believe the losses at CitiFinancial peaked in the second quarter of last year. We have now strengthened the quality of earnings by expanding the product basket to wealth management products. We continue to take a prudent approach to our consumer finance business; for example, we have brought down CitiFinancial branches from a peak of about 450 to 118. We continue to invest in and manage the business, but if we have a chance to unlock value in future, we will explore those options.
You are in a new country amidst a challenging business environment. How has the going been?
It’s been an extraordinarily smooth run. I’m actually in familiar terrain, having worked in Citi for over two decades (majority of it was in emerging markets). I agree it’s a very challenging business environment, but keep in mind India is amongst the very few countries that has a growing GDP. We have breadth, with a large employee base and a geographical presence in many cities across the country. We also have a very strong brand and millions of customers. We have (customer) relationships running into decades. In fact, India is one of the few countries where we have been present for over a century.
How different is Citi’s India franchise from other emerging markets?
India is unique. Without doubt, Citi India has been a major exporter of talent. The organisation here is incredibly talented and well-run. The business is also quite broad-based covering retail, corporate, treasury and capital markets. The number of customers in India is also very large as compared to other geographies.
Are you still recruiting?
Yes, we are recruiting new graduates. It’s an ongoing process. The important thing is to continue reinvigorating the pipeline and we do that by continuing to hire. This year, for example, when most companies decided to stay away from campuses, we recruited over 100 management associates. I have never understood why some companies decide to stop hiring from campuses. Remember, these hires are not meant to plug a gap today, but they are the potential leaders of your company in the next 10-20 years.
You have lost people at the middle-level in the recent past.
On occasion, we do lose people. You are never happy about it, but you have to be realistic. Citi is a favourite hunting ground for talent and over the years, we have contributed to creating leaders.
